The African Development Bank (AfDB) has warned that Africa’s economic growth, while robust in 2025, remains fragile and exposed to significant risks including debt distress, geopolitical tensions, climate shocks, and global financial volatility.
The report noted that high debt-service obligations continue to limit policy flexibility, diverting resources away from social and productive investment, while inflation, though easing, still erodes purchasing power for millions of households.
Geopolitical tensions and trade fragmentation could also affect exports, investment flows, and regional stability. “Navigating these challenges while sustaining growth momentum is a central policy imperative for African countries,” the report stated.
Despite these vulnerabilities, Africa outperformed the global average in 2025, with real GDP growth reaching 4.2 percent, up from 3.1 percent in 2024, surpassing the world average of 3.1 percent.
Growth was broad-based, exceeding 5 percent in 22 countries and topping 7 percent in six, driven by easing inflation, improved macroeconomic management, and favourable agricultural conditions.
Africa’s GDP growth is projected to stabilise at 4.3 percent in 2026 and rise to 4.5 percent in 2027. Twelve of the world’s 20 fastest-growing economies in 2025 were African, with East Africa maintaining its lead at 6.4 percent GDP growth, led by Ethiopia (9.8%), Rwanda (7.5%), and Uganda (6.4%).
GDP per capita growth increased from 0.9 percent in 2023 to 1.9 percent in 2025, though it remains insufficient to drive rapid poverty reduction.
Average inflation declined from 21.8 percent in 2024 to 13.6 percent in 2025, with further reductions expected in 2026 and 2027. Foreign direct investment rebounded sharply in 2024, rising over 75 percent to $97 billion, while remittance flows increased 14 percent to $104.6 billion, becoming the largest source of external non-debt financing.
AfDB President Dr Sidi Ould Tah said the continent faces a “critical moment as the world changes, not always in Africa’s favour.”
He cited geopolitical fragmentation, trade tensions, and declining global development finance as challenges, highlighting the Bank’s Four Cardinal Points agenda as a strategic framework to address them.
He added that the 2026 Macro-Economic Outlook was prepared before the recent Middle East crisis, and the Bank, with partners including the UNDP, is assessing its potential effects on Africa.
Prof Kevin Urama, AfDB Chief Economist, said the crisis is likely to have a limited impact on Africa’s macroeconomic outlook in 2026. “Africa has held strong in previous shocks and has the capacity to bounce back, provided the right policy levers are applied,” he said, estimating that a crisis lasting more than three months might reduce growth by only 0.2 percentage points.
Africa’s strong performance in 2025 underscores its resilience, but the AfDB report cautions that continued vigilance and policy coordination are required to sustain growth and protect long-term development gains.
